IRAS introduced a well-designed criterion to identify the cases that would be selected for the consultation process, introduced a three-step procedure to be applied for the implementation and conclusion of the consultation process, and provided for the granting of a surcharge for cases where it was found that the taxpayer`s business-to-business pricing agreements did not lead to market conditions. No. The withholding tax is not levied on the reimbursement/allocation of administrative costs (without a profit element) between a head office and branches under a cost pool agreement. Learn more about cost pooling (PDF, 1.48 MB) (see Part III, Section 12). Distributions of REITs to shareholders who are non-natural non-residents are subject to a 10% withholding tax or the applicable corporate tax rate. In order to mitigate possible transfer pricing adjustments and the resulting surcharges, it is imperative that Singaporean taxpayers establish a strong defence with respect to their transfer pricing agreements on a consistent basis. This could include the following: whether the Commission provides for relief from the double taxation of payments for technical services depends on the tax treatment of those services as provided for in the Commission. As a general rule, payments are subject to withholding tax if the non-resident company has a permanent establishment in Singapore. The term permanent establishment is used in a DTA between 2 Contracting States to determine whether a person resident in one Contracting State has a taxable/commercial presence in another Contracting State.
Each DTA has its own definition of permanent establishment. Is a payment to a non-resident supplier subject to withholding tax for the adaptation of software? If the cost of the equipment is included in the payment to the non-resident supplier, is the portion attributable to the equipment subject to withholding tax? Instead of multiple intra-group arrangements, group members may enter into a Cost Contribution Agreement (CCA) to share the development of intangible or tangible assets or to obtain services from each other. For a CCA to comply with the arm`s length principle: if the non-resident corporation is located in a jurisdiction that does not have a DTA with Singapore, the withholding tax rate is the prevailing corporate tax rate (i.e., 17%). A Singapore-based company received a loan from outside Singapore to buy a property overseas for investment purposes. Is interest subject to withholding tax? Is payment for web hosting services provided by a non-resident company subject to withholding tax? However, a withholding tax may be levied on payments for additional services physically provided in Singapore, such as. B further maintenance of software, user training, customization of software or information and development of complementary applications which do not fall within the scope of the rights-based approach. While we may not be able to predict IRAS` approach to transfer pricing, sound financial management would go a long way in mitigating transfer pricing risks. For Singaporean taxpayers, it would be wise to use these updates as an opportunity to review their transfer pricing agreements and compliance obligations to prepare for unpleasant surprises.
Does the withholding tax apply to consulting fees paid by a Singaporean company to an independent U.S. consulting firm for a project in China? If a payment is made to a copyright holder for the transfer of partial copyright rights (e.g. B copyright license to be commercially exploited by the payer), the payment is a license fee. These payments to non-residents are subject to a withholding tax of 10% or the reduced rate provided for by a double taxation agreement (DTA). In general, payments to non-residents for services provided in Singapore are subject to withholding tax. The portion of the purchase price of the software system attributable to the services provided in Singapore is subject to withholding tax. Does withholding tax apply to administrative costs paid to a non-resident company for services provided in Singapore on a cost-plus basis? If so, can I withhold taxes on the supplement instead of the gross fee? However, if all of the following conditions are met, there will be no profit allocation to the EP and therefore no Singaporean tax liability for the foreign company resulting from the inter-company service agreement: In general, withholding tax is levied on the guarantee fee paid to a non-resident. However, withholding tax is not levied if the guarantee fee paid to the non-resident person is not considered to have originated in Singapore. Professional services provided by a non-resident person are not covered by the article on business profits, but fall under the article on independent personal services. Learn more about withholding tax for non-resident professionals. Does the withholding tax apply to payments to a non-resident head office for management, administrative, human resources and financial services if the amount paid is an allowance or reimbursement of expenses? A Singapore-based company paid interest to a non-resident on a loan granted for the operation of its branch outside Singapore. Is interest subject to withholding tax? Payments for digitized software or goods that are not associated with the transfer of copyright embedded in the goods are considered payments for copyrighted items and are not subject to withholding tax.
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